Describing the market’s performance over the past two years as a “boring phase,” ICICI Prudential AMC Executive Director and CIO S. Naren said at the ET Alpha Wealth Summit on Thursday that the ongoing tug-of-war between mutual funds and foreign institutional investors (FIIs) means investors are unlikely to lose money, but are also unlikely to generate outsized returns.While delivering the opening address at the summit, Naren outlined five distinct periods in any market cycle, each demanding a different posture. The first is the worst phase of a major global negative event like Lehman Brothers, 9/11, or Covid. A once-in-a-decade opportunity that almost no one actually buys at the moment it presents itself.The second, which is the best phase, arrives roughly six months later, when the dust has settled enough for investors to act, but prices have not yet fully recovered. That, he said, is where the serious money is made.The third phase is what he calls the boring, and it is where India sits right now. One set of investors sells every day; another set buys. FIIs sell, domestic mutual funds absorb. Returns are moderate, losses are unlikely, and nothing dramatic happens in either direction. The fourth is the boom phase, when both FIIs and mutual funds are buying simultaneously, as in 2006. Entry during a boom rarely ends well in the long run. The fifth and final phase is the bubble, which Naren argued is visible to the naked eye if you know what to look for.Reading the bubbleIn January 2026, for the first time, the money flowing into gold and silver ETFs in India crossed the amount flowing into equity mutual funds. That, Naren said, is a textbook bubble signal. Pointing out how people in Korea are taking loans against insurance policies to buy SK Hynix and Samsung, while in Taiwan personal loans are being deployed into semiconductor stocks, the ace fund manager said, when leverage of that kind enters a market, it places you close to a bubble almost by definition.The chart pattern that accompanies a bubble is equally legible. Silver rose roughly 230% over the recent cycle; the Korean KOSPI rose 179%. When a chart turns parabolic on the upside, there are very few sellers and many buyers, which is precisely why the chart looks the way it does. The investor who sells into that move will normally make money, but will be among a very small minority. The guts required to be that seller, Naren acknowledged, are rare.He offered a simple set of thresholds. If an asset class goes up more than 40% CAGR for five years, be careful. If it falls more than 50% in a year, start looking at it positively. And if it has delivered poor or zero returns for a full decade, think positively because after ten years of nothing, most investors simply give up, and that mass capitulation is exactly what creates the next opportunity. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)